Cannot start application, Nuxt loading node modules from incorrect directory

Environment

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• Operating System: Darwin
• Node Version: v17.9.0
• Nuxt Version: 3.0.0-rc.10
• Nitro Version: 0.5.3
• Package Manager: npm@8.5.5
• Builder: vite
• User Config: -
• Runtime Modules: -
• Build Modules: -

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Reproduction

npx nuxi init nuxt-app npm i npm run dev

Describe the bug

Immediately hit with “Cannot find package ‘@vue/server-renderer’ imported from /Users/marco/node_modules/vue/server-renderer/index.mjs”

I’ve tried installing multiple times but no luck so far.

Additional context

Logs

✔ Nitro built in 481 ms
ℹ Vite client warmed up in 1322ms
[nuxt] [request error] [unhandled] [500] Cannot find package '@vue/server-renderer' imported from /Users/marco/node_modules/vue/server-renderer/index.mjs
  at new NodeError (node:internal/errors:372:5)
  at packageResolve (node:internal/modules/esm/resolve:908:9)
  at moduleResolve (node:internal/modules/esm/resolve:957:20)
  at defaultResolve (node:internal/modules/esm/resolve:1173:11)
  at ESMLoader.resolve (node:internal/modules/esm/loader:604:30)
  at ESMLoader.getModuleJob (node:internal/modules/esm/loader:318:18)
  at ModuleWrap.<anonymous> (node:internal/modules/esm/module_job:80:40)
  at link (node:internal/modules/esm/module_job:78:36)
^C

[pi0]

As an update, we had a quick call with @marcodarko. Removing or renaming stale node_modules from home directory solves the issue. It is an environment-specific issue. Trying to find a solution for it but as quick workaround, simply remove the directory.

[pi0]

Thanks once again @marcodarko for reproduction. Moving this issue to https://github.com/nuxt/framework/issues/7609. It is related to the vite-node package that is enabled.